Hockey’s Loonie Problem May Cost NHL $200 Million, Bettman Saysby and
About one-third of the NHL’s overall revenue comes from Canada
All-U.S. playoffs net more U.S. dollars, fewer Canadian fans
The National Hockey League may miss out on as much as $200 million this season because of the slide of the Canadian dollar, according to league commissioner Gary Bettman.
Bettman said in an interview on Bloomberg Television that while he still believes the NHL will set a revenue record this year, it will do so in spite of a Canadian dollar that fell to a 13-year-low in January.
“It’s a fact of life, it’s something we deal with,” Bettman said.
The Loonie has since rebounded, rising to 76 U.S. cents from 68 U.S. cents, but remains well below the 92-cent rate of two years ago. Bettman said the league, which is currently considering expanding to Las Vegas or Quebec City, assumes it will stabilize at about 80 U.S. cents.
The league will record an estimated $4 billion in revenue for the 2015 fiscal year, up about 8 percent from last year’s record $3.7 billion. About one-third of the NHL’s revenue comes from Canada -- either from ticket sales for the seven teams North of the border, its $5.2 billion television deal with Rogers Communications Inc. (which pays in Loonies) or from Canadian sponsorships. For a league that conducts all its business in U.S. dollars, a weak Canadian dollar means less profit.
That dip is jointly shouldered by team owners and players, who split revenue 50-50. To ensure an even split, players have a portion of their paychecks withheld each pay period and held in escrow for re-balancing at the end of the year. That escrow percentage grew to 18 percent this year, and players will likely lose a majority of that at the end of the year.
For the first time in 46 years, no Canadian teams made the playoffs. While that means a larger percentage of playoff revenue was generated in U.S. dollars because every game was played in a U.S. arena, it’s also lowered interest in some the league’s most important markets. ESPN reported that for first-round games, ratings on Canada’s Sportsnet channels and CBC were down 60 percent over last year when five of the seven Canadian teams made the post-season.
Bettman said that while the NHL’s revenue growth has come across the entire business, the league has seen its biggest boon in its digital platform. The league last year signed a six-year, $1.2 billion contract with Major League Baseball’s interactive media and Internet arm, or BAM, to operate the its digital operations, streaming services and TV network. The NHL got a 10 percent stake as part the deal.
The NHL playoffs are currently in the middle of the conference finals. The NHL’s fiscal year ends June 30.